Recovery gaining strength as third quarter GDP growth is revised up

Third quarter GDP inched closer toward potential growth after the second estimate. GDP was revised up from 2.0% in the advance estimate to 2.5% in the second estimate. The consensus expected 2.4% growth.  That means that the recovery is not quite as sluggish as previously believed.

The upward revision was primarily due to higher estimates for personal consumption, producers' durable equipment & software, exports, and federal government spending. Partial offsets were seen in a lower estimate for residential investment, nonresidential structures, inventories, and a higher figure for imports.

Year-on-year, real GDP in the second quarter is up 3.2 percent, compared 3.0 percent in the second quarter.

On the inflation front, the GDP price index was unchanged from the initial estimate of 2.3 percent. The consensus forecast was for 2.3 percent.  My real question is why is there such a descrepancy in the CPI numbers and the GDP price index?

The bottom line is that the recovery has regained some momentum with the consumer sector taking on a little more of the growth burden. At the same time, inflation is above any numbers that you get from the government. 


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